The upgrading of the sovereign notation of India by S&P Global Ratings has strengthened the country’s macroeconomic fundamentals and is particularly essential at a time when the United States has imposed prices of 50% on India.
The World rating agency improved Thursday the undefined sovereign credit ratings from India on India to “ bbb ” of “BBB-” with a stable perspective, citing the economic growth of the country’s basis, in the backdrop of an improved monetary policy environment which anchors inflationary forecasts. Although India’s GDP growth jump at 6.5% for financial year 26, he also said that he does not expect the 50% (if imposed) prices “pose a material trail on growth”.
The upgrading of the rating comes after a period of 18 years and comes after its decision in May 2024 to revise the prospects of India to the positive of stable. Political decision -makers have long highlighted the strong economic growth of India, budgetary discipline and the reforms of global rating agencies and had called for an upgrading of rating.
Nr Bhanumurthy, the director of Madras, the school of economics, stressed that the upgrading of the rating will give greater confidence to foreign investors and that more foreign capital will come in India. “The upgrade is extremely well timed and occurs when India is faced with the enormous American prices. It strengthens our opinions on the Indian economy in the medium and long term and gives the closure of national and external accounts in terms of budget deficit and current account deficits,” he said.
India, however, still has a long way to go to become a higher savings saving.
However, in the field, the credit ratings are considered by market players and financiers as the measure of the ability of a borrower to reimburse loans and to assess the probability of a defect. The upgrading of S&P means that India will now be considered a more resilient investment destination for foreign investors and that the cost of financing public debt will also decrease.
Ranen Banerjee, partner and economic advisory chief, PwC India, said that upgrading of rating would be a major positive friction on the exchange rate. “This reduces yields and will lead to more capital flows in the country.
The advantages of upgrade will also help companies reduce their offshore borrowing costs and notes for several companies may also be improved. Shortly after its announcement of upgrading the sovereign ratings of India, S&P also increased its long-term transmitter credit notes on the export bank of India and the Indian Railway Finance Corporation in “ BBB ” from “ `bbb- ” with a stable perspective. He also upgraded the credit dimensions on NGOs, Power Grid Corporation, NTPC and Tata Power to “BBB” from “BBB-” with stable prospects.
Radhika Rao, Executive Director and Senior Economist at DBS Bank, noted that S&P improved the higher credit notation in the world of investment note, bringing the country equally with Indonesia and Mexico.
“The positive momentum on the back of this upgrade will help reduce the credit bonus on the sovereign’s debt as well as to facilitate more businesses in companies’ offshore,” she said.
Indranil Pan, chief economist, Yes Bank, said that upgrading of ratings will be positive for foreign flows in India, and will lead to a stable currency atmosphere, adding to the belief of a drop in risks on the financial markets for India. »»
Sujan Hajra, chief economist and executive director, Anand Rathi Group stressed that the upgrading of S&P India is certainly a welcome development – but it is also, by any reasonable measure, too little and too late. “What market players and Indian observers have recognized for a long time, it is only now that the rating agencies. The reality is that the economic and financial dynamism of India has far exceeded its perceived credit risk,” he stressed, adding that for investors, this upgrade changes little.
“The positive trajectory of Indian actions and other asset classes should continue, powered by the same structural forces which have supported their outperformance for years-regardless of the verdicts rendered by the rating agencies,” he said.
